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Generating an annuity payment using a dynamic asset allocation investment

Active Publication Date: 2007-01-11
FMR CORP
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  • Summary
  • Abstract
  • Description
  • Claims
  • Application Information

AI Technical Summary

Benefits of technology

[0013] In another aspect, there is a method that includes determining a first asset allocation for a first time period based on a benchmark rate, determining a second asset allocation for a second time period based on the benchmark rate, and determining an annuity payment amount made to an annuitant for a predefined period based on the benchmark rate. The annuitant has a life expectancy based on a demographic. In some implementations, the second asset allocation is different than the first asset allocation. The second asset allocation may be different because the annuitant has changed the demographic. For example, where the demographic is age, the annuitant may have aged. The demographic may also be a gender. This method is advantageous because it allows the asset allocation to be re-evaluated periodically and adjustments made based on market conditions.

Problems solved by technology

After retirement, individuals typically rely on savings and investments to pay for day-to-day expenses since they lack a steady job-related income.

Method used

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  • Generating an annuity payment using a dynamic asset allocation investment
  • Generating an annuity payment using a dynamic asset allocation investment
  • Generating an annuity payment using a dynamic asset allocation investment

Examples

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Embodiment Construction

[0021]FIG. 1 is a process 100 that depicts the creation and lifecycle of an immediate annuity. The process 100 begins (105) by the annuity provider receiving (110) payment for the annuity. The payment is typically a lump sum amount that the contract holder pays to an annuity provider (e.g., an insurance company) in exchange for the annuity provider's promise to provide an annuitant (typically the same individual that bought the annuity, i.e., the contract holder) with an income stream of an estimated amount for the remainder of her life. Then the contract holder selects (115) an investment (e.g., a specialized fund) based on, for example, the annuitant's demographic information (e.g., age, gender, and / or other factors that can affect life expectancy). The contract holder is, in effect, buying an income stream that changes based on the performance of an investment, for the rest of the annuitant's life. Advantageously, such choice enables the income stream to increase over time based ...

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Abstract

An annuity is provided to an annuitant based on the performance of an investment. Assets of the investment are automatically reallocated over time and the annuity payment may change based on the performance of the automatically allocated assets. In some examples, the assets are automatically reallocated based on a demographic, which can include an age, a range of ages, and / or a gender.

Description

FIELD OF THE INVENTION [0001] The description relates to generating an annuity payment using a dynamic asset allocation investment. BACKGROUND [0002] After retirement, individuals typically rely on savings and investments to pay for day-to-day expenses since they lack a steady job-related income. One method of saving and / or generating wealth is investing in an annuity. An annuity is a savings or investment contract that makes payments, immediately, or at some deferred time in the future, to the beneficiary (the “annuitant”) of the contract, usually the individual that invested in the annuity, for the remainder of the individual's life. Some annuities allow the individual to save and / or grow money tax-deferred, taxing the gains at the time of disbursement. For post-retirement annuitants, deferring taxation is advantageous because the annuitant does not have an employment-derived income, typically falls into a lower tax bracket, and thus incurs a lower tax liability on the annuity pay...

Claims

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Application Information

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IPC IPC(8): G06Q40/00
CPCG06Q40/00G06Q40/06G06Q40/02
Inventor SHELON, JONATHANCHENG, REN
Owner FMR CORP
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